Americans Are Not Going Bankrupt Over Lattes

[Iris]

Here's an interesting article that appeared on Salon.com earlier this week.


http://www.salon.com/tech/feature/2003/10/13/bankrupt_parents/index.html

“Elizabeth Warren, a professor at Harvard Law School, and her daughter, Amelia Warren Tyagi, a former McKinsey consultant, studied nearly 2,000 families that had gone bankrupt in the U.S. They analyzed myriad federal data detailing what Americans are actually spending their money on today compared to the legendarily more austere 1970s. What they discovered shocked even them: The effort to keep the kids in a good school district when one parent is laid off is more likely to drive Americans into bankruptcy court than all those trips to the Niketown store.”

______________
“Today's families are in financial trouble, because they're spending so much more on big fixed expenses -- mortgage, health insurance, car, preschool, after-school care and college.
What's happened is that the cost of being middle-class has shot out of the reach of ordinary families over the past generation.
Today's two-income family has 75 percent more income than the one-income family had a generation ago, but by the time they make four basic payments and their taxes they have less money to spend than their one-income parents.”
______________

“This is not about spa bathrooms and granite countertops. The average family in the U.S. today lives in a house that is 6.1 rooms. That's larger than the average family in the early 1970s -- they lived in a house that was 5.7 rooms -- but today's family has hardly rocketed into McMansion status.”
______________
“And there's a whole school of very popular financial planning built around this idea that if you don't have that latte ...
Americans are not going broke over lattes! Americans are going broke over home mortgages and health insurance. To claim that it is lattes is first to blame the families for something that is not their fault. And secondly, it removes all pressure to focus on political changes that need to be made. In the early 1980s, with no debate, Congress quietly deregulated the home mortgage-lending industry and the credit card industry”
______________


So, how can the Democrats reach people like this and convince them that voting Republican is voting against their own self-interests?

Or, maybe I should ask, which Democratic candidate would be willing to tangle with the credit card and home mortgage industry?

[DuctapeFatwa]

1. None that wanted to get or keep serious money

This issue is kind of like unconditional support for Israel - any politician who expresses any serious opposition has decided that politics is not his career choice after all.

The fact is that US politics is business, just like weapons systems and Apache helicopters and the credit cards and banks are business.

[KamaAina]

2. Why do only expensive suburbs have "good school districts"?

That's one of the issues we as progressives really need to address. If we actually had good quality public education for everyone, families wouldn't feel they had to bust themselves to buy even a low-end home in a "good school district".

Then there is the matter of cars. I would wager that most of the families described here are actually making two car payments. Reason? Crappy public transporation, nearly everywhere, and ESPECIALLY in those same suburbs with their "good school districts"!

And so, level the playing field in education to make expensive suburbs a luxury, add decent transportation to make the second car a luxury, and maybe, just maybe, middle-class families can make ends meet.

Now if we could only do something about health care... (sigh)

[Iris]

4. I thought about the school situation as well.

And that's why I just can't understand anyone in the 20s and 30s who is even considering having a child not wanting the public school systems to work.

I plan on having 1 child - just one because I know that my husband and I will both have to work most of his/her life and also that we will probably be shelling out major bucks for either private education or services to supplement public education. A $300 tax break doesn't even make a pin hole in those expenses.

[SharonAnn]

6. About "good" vs "bad" schools, the real questions are these:

Why do the children of from educated, middle-class or above income families do better in schools than children from ill-educated, poor or lower-income families?

What is it that the children of the first group get that the children of the second group don't get?

Is it:
Better genes
Better nutrition
Better health care
More parental supervision
More parental involvement
Safer environment
More educational extra-curricular activities
More family support/encouragement
Higher standards
Higher goal setting
More reliable transportation

Then last, are these, is it:
Better schools
Better teachers
Smaller class sizes
More materials (textbooks, computers, etc.)

etc.

Until we ask ALL the questions, we don't know what to do. After all, if a child comes to school hungry or goes home to chaos and gets little sleep, then just addressing teachers and class sizes isn't enough.

[Iris]

7. I think most children are going home to chaos

and I wouldn't be surprised if the average kid has a sleep deficit.


But I know the kind of chaos you're talking about is worse than just coming home to 2 parents who are exhausted from work.

Our society has some serious problems and it just seems like no one cares. Anyone who tries to address them gets labeled as a socialist, commie, feminist, pinko, leftist . . .

[PeaceProgProsp]

3. Not-so-free market, when you don't have a real choice about buying

The Republicans have been making sure that the things you DON'T have a choice about buying are more expensive.

Few people are willing to take a chance on their kids' futures, so they bend over backwards to keep their childrens' hope alive. And once you have a mortgage, you don't have much choice if the interest rates make it mor expensive. And few people are going to chose not to have health insurance.

Also, notice how the big ticket items all have a finance angle to them. No wonder citigroup is so rich and powerful. They're probably making billions off student loans to middle and working class kids.

[Iris]

5. The student loan problem

There's an article in the aug/sept Utne reader about student loans and how huge they are and how they are handicapping the younger generation.

Yet, these are the same kids who gleefully vote for people who want to get rid of Social Security.

[revcarol]

8. I thought the number 1 reason for bankruptcy was a serious illness.

Seems to me that I read that even people with insurance couldn't pay the deductibles and 20% of their plans if they had to have a triple bypass or they had a continuing illness that required big drug expenditures.

And people without insurance had to go to a public hospital and then all the doctors and outside lab tests weren't paid so they had to declare bankruptcy to get out from under their bills.

Would bet that reason # 1 is an unexpected serious medical expense.Then combine this with mortgage, ordinary living expenses...

And I agree that all those "financial planners" who say,"Just give up your daily latte" have had no contact with reality for years.

A myth like welfare mothers driving new Cadillacs.

[Iris]

10. the article does say

that there's no "back-up" if one of the breadwinners becomes ill because the family depends on both incomes to get by. Also, the article mentions how hospitals send people home "sooner and sicker" so that someone is needed at home to care for the ill person, which means someone is probably missing work.

[Nederland]

9. Why

Or, maybe I should ask, which Democratic candidate would be willing to tangle with the credit card and home mortgage industry?

Why in the world would they do that when the deregulation of the mortgage industry has made owning a home much much easier than it was? Home ownership rates have been increasing every since deregulation, especially for minorities.

[Iris]

11. But are people hanging on to those homes?

The article focused mainly on second mortgages and high interest mortgages made to people in desperate financial straits - some of the mortgage rates are over 15%. As far as minorities owning homes, in the state I live in, they are the ones paying huge interest rates and are also most at risk for foreclosure.